R. JAYARAJ, M.A., Ph.D.,

Transcription

1 Analyzing the international business environment and identifying key factors for international business operations R. JAYARAJ, M.A., Ph.D., 1-1

2 What is International Business All commercial transactions between two or more countries Private Public International business adds significant influences to typical domestic operations Physical Societal Competitive

3 Management in International Business In additional to domestic business management skills, international business management requires Social science understanding Political science appreciation Legal awareness And an innate ability in: Anthropology Sociology Psychology Economics Geography

5 Reasons for Growth in International Business Rapid increase in and expansion of technology Transportation is quicker while costs are lower Communication enables control from afar Liberal government policies on trade and resources Development of institutions that support international trade Consumer pressures Increased global competition

6 The Global Business Environment The Global Marketplace is complex, interdependent, and dynamic Challenges include politics, culture, and technology Managers must find a balance between social responsibility, company image, and competitive strategies More focused on Global Management 1-6

7 The Global Business Environment Global competition is characterized by networks that bind countries to one another Globalism trends A borderless world Increase in exports Increase in direct foreign investment Dominance of trading blocs 1-7

8 Information Technology Information Technology is transforming the international manager s agenda more than any other item Information is no longer centrally or secretly controlled by governments Information technology is boosting productivity and electronic commerce around the world 1-10

9 1-11 The Global Manager s Role

10 Analyzing the international business environment and identifying key factors for international business operations Element 1 Examine patterns of international trade. Performance criteria Global trade patterns are assessed and multinational markets are identified in terms of location, ownership, products and companies involved. The terms Free Trade and Protectionism are defined and international markets that operate under these respective trade structures are identified. International trade agreements that involve a country are examined, trading partners are identified and access arrangements for these markets, including CER, GATT, and WTO are evaluated. International trade policies that impact upon a country s trade are examined and trading partners, including EU, NAFTA, and ASEAN etc. are identified.

11 1-13 Element 2 Identify economic and political factors that impact upon international business opportunities. Performance criteria Risk factors are identified and international business opportunities are ranked against risk factors. Range: political stability, financial stability, legal and regulatory requirements, cultural factors, trade barriers, corruption risks. Risk factors are related to international business cycles in terms of economic conditions of prosperity, recession, depression, recovery, and business cycle stages are identified for proposed international markets. Operational factors are identified and international business opportunities are ranked against operational factors. Range: ownership structures, employment and work practices, technology resources, distribution infra-structures, resource availability, income distribution.

12 Element 3 Assess social and cultural factors for international business operations. Performance criteria Social characteristics of international markets are analysed in terms of reference groups, family roles and status, social values, and these characteristics are assessed for their impact upon business operations Cultural characteristics of international markets are analysed in terms of cultural traditions, preferences and behaviours, and these characteristics are assessed for their impact upon business operations.

13 1-15 Element 4 Recognise international business issues for developing countries. Performance criteria Economic development, transportation and communication systems of developing countries are assessed for their capability to service international business opportunities. Political, cultural, legal and regulatory factors in developing countries are assessed and their impact upon international business operations is estimated. Resource availability, resource sustainability and resource management implications are identified for international business operations in developing countries. The level of technology required to service international business activities in developing countries is assessed for international business opportunities. The impact of international business operations on the social and cultural environment of developing countries is assessed for international business opportunities. Sources of comparative and competitive advantage of developing countries are assessed for international business opportunities.

14 1-16 Element 5 Identify international business involvement options for a country s organisations. Performance criteria International business involvement levels are identified and the features of each level are compared and evaluated for international business opportunities. Range: exporting, licensing, joint venture, strategic alliances, direct investment. The role of the country s Government in assisting a country s organisations to participate in international business activities is identified, and the functions of the Ministry of Foreign Affairs and Trade and Ministry of Commerce are analysed in relation to identifying and supporting international business activities. Range: political activities, trade relations, international business services, national business services.

15 Economic Factors Size and growth rate of GDP Foreign exchange rate fluctuations Size of market for your product Level of disposable income (available for spending) Propensity of people to spend (change in spending divided by change in disposable income) Interest and inflation rates Unemployment rates Fiscal and monetary policies

17 Political Factors Form and stability of government Attitude toward private investment by government, customers, and competition Degree of anti-foreign discrimination Amount of red tape Amount of corruption Deregulation and/or regulation

18 The Political and Economic Environment One important aspect is the phenomenon of ethnicity Driving force behind political instability Firms must assess political risks Government actions that could adversely affect the long-run profitability or value of a firm 1-20

19 Political Risk 7 Typical risk events Expropriation of corporate assets without prompt and adequate compensation Forced sale of equity to host-country nationals, usually at or below depreciated book value Discriminatory treatment against foreign firms in the application of regulations or laws Barriers to repatriation of funds (profits or equity) 1-21

20 Political Risk 7 Typical risk events Loss of technology or other intellectual property (such as patents, trademarks, or trade names) Interference in managerial decision making Dishonesty by government officials, including canceling or altering contractual agreements, extortion demands, and so forth 1-22

21 Managing Political Risk Avoidance either the avoidance or withdrawal of investment in a particular country Adaptation adjust to the political environment Dependency keeping the host nation dependent on the parent corporation Hedging minimizing the losses associated with political risk events 1-23

22 The Legal Environment Manager s will comply with the host country s legal system Common Law past court decisions act as precedents to the interpretation of the law Civil Law comprehensive set of laws organized into codes, interpretation is based on reference to codes and statues Muslim law based on religious beliefs, it dominates all aspects of life 1-24

23 1-25 The global legal environment refers to the legal environment in international business. The legal environment regulates the operations of firms in international markets. It is sufficient for a firm operating at the domestic level to stick to regulations of the land, but organizations operating in different countries need to know and comply with the laws of the domestic country as well as all the host countries they operate in.

24 1-26 Governments impose laws to protect the home industry from cut- throat global competition. They impose different kinds of tariffs, enter into agreements and sign treaties to protect indigenous industry and promote local trade. When governments feel that the home industry is affected because of dumping, under Article VI of GATT, they can impose heavy anti-dumping duties. To protect domestic industry, they can also impose non-tariff barriers and frame regulations on foreign investments.

25 1-27 In international business, disputes and litigation are common. To resolve differences between countries, all member nations of the WTO have established a Dispute Settlement Body. It is the final authority and passes rulings and frames regulations on disputes between/among member countries. WTO members have entered in to agreements and established committees to regulate and govern international trade in information technology products. Laws have also been framed to regulate and bring uniformity to the interpretation of transportation rules among countries.

26 The Technological Environment Corporations must consider the accelerating macroenvironmental phenomenon of technoglobalism (rapid developments in information and communication technologies) Corporations must consider the appropriability of technology 1-28

28 Geographic Factors Availability and efficiency of transport Proximity of site toward markets Availability of local raw materials Availability of power, water, gas Availability of suppliers and services

29 Labor Factors Availability and costs of managers and workers Degree of skill and discipline at all levels Presence and strength of unions Literacy and trainability of workers Degree of labor mobility

31 Capital Factors Cost of local borrowing Local availability of convertible currencies Modern banking systems Government credit aid to new businesses Venture capital industry Regulation of banking industry

32 Business Factors State of marketing and distribution system Normal profit margin in the industry Competitive situation Quality of life for expatriates

33 Social Factors Education of consumers Age of population, life expectancy Number of divorces, births, deaths Immigration and emigration rates Influence of minorities Changes in life styles

35 Political and Social System Voids Degree of government interference Protection of private property rights Quality of bureaucrats Independence of judiciary Religious or ethnic tensions Independence of media Corruption and organized crime

36 Openness Receptive to foreign investment Amount of government restrictions Length of time to start a new venture Amount of tariffs Choice of location in the country Free trade agreements Difficulty in getting work permits

37 Product Market Voids Availability of market research Data on quality of goods and services Quality and number of suppliers Logistics and transportation infrastructure Size and number of retail stores Types of distribution channels Collection of receivables

40 Global E-Business Convenience in conducting business worldwide; facilitating communication across borders contributes to the shift toward globalization and a global market. An electronic meeting and trading place, which adds efficiency in conducting business sales. A corporate Intranet service, merging internal and external information for enterprises worldwide. Power to consumers as they gain access to limitless options and price differentials. A link and efficiency in distribution. 1-42

Marketers must: The Political, Legal, and Regulatory Environments of Global Marketing Global Marketing Chapter 5 Attempt to comply with each nation s laws and regulations. Keep up with laws and regulations

Competency: Basic International Concepts 1. Define international business and explain terms and concepts related to international business and marketing. 2. Compare and contrast the types of economic systems.

GLOBALIZATION INTERNATIONAL BUSINESS OBJECTIVES To define globalization and international business and how they affect each other To understand why companies engage in international business and why international

INTERNATIONAL BUSINESS PLANNING CHECKLIST For Development of Overall International Business Plan Thomas B. McVey 1 Introduction: The following Checklist is designed to be used by a Company s senior management

DOING BUSINESS IN INDIA: OPPORTUNITIES AND LEGAL ENVIRONMENT 1 Ruchira Gupta, Advocate The Juris Sociis, Advocates and Advisors The Juris Sociis, Bangalore, India AGENDA India, the country political and

Introduction By the end of the programme, you will have a specialised knowledge of international business law that reflects the changing commercial, social, political and technical realities of the global

ENTERPRISE DEVELOPMENT STRATEGY Small- and Medium-Sized Enterprises I. Introduction I.1 Current Challenge: Most countries in the region are undergoing reforms that are opening their economies to greater

International Business Management Program Standard The approved program standard for International Business Management program of instruction leading to an Ontario College Graduate Certificate delivered

2002, Jan. 13 Ministry of Economy, Trade and Industry Japan Barriers to Business in India Japanese companies operating in India have indicated that there are many barriers to doing business in the Indian

AGREEMENT BETWEEN THE GOVERNMENT OF THE ITALIAN REPUBLIC AND THE GOVERNMENT OF ON THE PROMOTION AND PROTECTION OF INVESTMENTS The Government of the Italian Republic and the Government of the..., hereafter

egypton.com Business in Egypt Your step-by-step guide to doing business in Egypt Egypt enjoys working with the world We are committed to encouraging the world s ICT companies to come and do business in

World 5 The the Global Economy 5-1 Chapter Objectives World Key Facts About U.S..,,. How Rates are Determined in Currency s. How Why Sometimes Interferes with Free. Role Played by Free- Zones the WTO in

DRAFT SOCIAL STUDIES Economics Economics Economics is the study of how individuals, businesses, and governments make decisions about the allocation of scarce resources. The economics course provides students

Unit 1 Chapter 5 5 The United States and the Global Economy Chapter Objectives Key Facts About U.S. International Trade Comparative Advantage, Specialization, and International Trade How Exchange Rates

Logistics Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of

Chapter International Managerial Finance Web T his chapter provides a brief introduction to international finance. Of course, whole courses and even degree programs are offered on this topic. The reason

Final Report High Level Working Group on Jobs and Growth February 11, 2013 INTRODUCTION As the United States-European Union High Level Working Group on Jobs and Growth (HLWG) noted in its June 19, 2012

Field 010: Career and Technical Education Business and Information Technology Assessment Blueprint Domain I Business Management and Ownership 0001 Business and Human Resources Management (Standard 1) 0002

12 Globalization and International Trade Globalization refers to the growing interdependence of countries resulting from the increasing integration of trade, finance, people, and ideas in one global marketplace.

EUROPEAN FREE TRADE ASSOCIATION ASSOCIATION EUROPEENNE DE LIBRE-ECHANGE CSC 9/98 21 October 1998 Brussels An Opinion from the EFTA Consultative Committee The Impact of the Common Currency on European Economies,

ECOWAS COMMON INVESTMENT MARKET IN THE REGIONAL INTEGRATION AGENDA Jonathan Aremu Ph.D Consultant, ECOWAS Common Investment Market Abuja Introduction Different group of countries are coming together all

LEGISLATIVE DECREE Nº 662 APPROVING THE JURIDICAL STABILITY SYSTEM FOR FOREIGN INVESTMENT Legislative Decree published on September 2nd, 1991. WHEREAS: The Congress of the Republic, pursuant to the provisions

CLEANSED TEXT OF THE LAW ON THE POLICY OF FOREIGN DIRECT INVESTMENT IN BOSNIA AND HERZEGOVINA (This text includes original Law on the Policy of Foreign Direct Investment in Bosnia and Herzegovina, Official

The World Trade Organization......In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure

1 Strategy & the firm Strategy: actions that managers must take to attain the goals of the firm Main goal usually to maximize long- term profit (П)( Profitability defined by return on sales or return on

ADVANCED CERTIFICATE IN INTERNATIONAL TRADE Module One - The Business Environment This module has been designed to provide a broad knowledge and understanding of the conditions under which international

Subject CT7 Business Economics Core Technical Syllabus for the 2016 exams 1 June 2015 Aim The aim of the Business Economics subject is to introduce students to the core economic principles and how these

MGE#12 The Balance of Payments The Current Account, the Capital Account and the Balance of Payments Introduction to the Foreign Exchange Market Savings, Investment and the Current Account 1 From last session

National Interest Analysis [2014] ATNIA 10 with attachment on consultation Treaty on Economic Cooperation between the Government of Australia and the Government of the Independent State of Papua New Guinea

World Bank Guidelines on the Treatment of Foreign Direct Investment The Development Committee Recognizing that a greater flow of foreign direct investment brings substantial benefits to bear on the world

The Transatlantic Trade and Investment Partnership (TTIP) State of Play 27 April 2016 27 April 2016 Background / context for the negotiations The European Union and the United States have the most integrated

International Business Plan A PRACTICAL GUIDE FOR EXPORTERS ÍNDICE 1 TABLE OF CONTENTS PLAN STRUCTURE 5 SECTIONS 6 EXPLANATORY NOTES 36 CASE STUDY 67 This is a sampble of 18 pages out of 97 of the International

The World Trade Organization......In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure

CUBAN FOREIGN INVESTMENT LEGISLATION Decree Law 50 of 1982 ( Decree Law 50 ) was Cuba s first foreign investment act authorizing the formation of international joint-ventures with foreign investors. In

PROGRAM CONCENTRATION: Marketing Sales & Service CAREER PATHWAY: Optional Course for All Marketing Pathways COURSE TITLE: International Business & Marketing International business and marketing will focus

Chapter 10: The Globalization of Trade and Finance MULTIPLE CHOICE 1. The vicious cycle common to financial panics in Thailand was a result of a. investors deciding to hold off from selling and waiting

Bangkok Bank Public Company Limited 044 RISK FACTORS AND RISK MANAGEMENT Bangkok Bank recognizes that effective risk management is fundamental to good banking practice. Accordingly, the Bank has established

ANNUAL REPORT ON DISCRIMINATION IN FOREIGN GOVERNMENT PROCUREMENT April 30, 2001 I. Introduction A longstanding objective of U.S. trade policy has been to open opportunities for U.S. suppliers to compete

OPEN MARKETS FOR INTERNATIONAL TRADE AND INVESTMENT Fast Facts In 2008, more than 38 million jobs in America more than one in five depended on international trade exports and imports. 1 In 1992, a year

Cambodian Preparedness for ASEAN Economic Community 2015 Presentation to the Bar Association of the Kingdom of Cambodia By Mr. Sok Siphana Member of the Bar Council 1 Outline n Background n Progress and

Chapter 9 The Case for International Diversification Introduction In this chapter we cover: The advantages and disadvantages of international investing. Present the traditional case for international diversification.

DUE DILIGENCE DATA ROOM CHECKLIST The following pages contain a detailed due diligence checklist that has been compiled from many years of M&A projects. While this is one of the most extensive and comprehensive

I BASIC PROVISIONS Scope of application Article 1. This Law regulates foreign investment into companies and other forms of business establishments with the aim of profit gaining (hereinafter referred to

SUMMARY OF THE FORUM Vietnam: Readiness for WTO Accession Hanoi, June 3-4, 2003 and Ho Chi Minh City, June 6-7, 2003 Forum as the most comprehensive event on WTO accession to date. The international forum

1 International Business: An Overview International Business is all commercial transactions private and governmental between two or more countries. Private companies undertake such transactions for profit;

A Trade Agenda that Gets Results Annex to the Canadian Chamber of Commerce Election Platform June 2015 A Trade Agenda that Gets Results The Canadian Chamber of Commerce 1 Canada s next government should

REVISING Macroeconomics (LIVE) 2 JULY 2015 EXAM QUESTIONS Question 1 (Adapted from DBE November 2014, Question 2.1) Answer the following questions. 1.1 State TWO methods that are used to calculate national

MSc International Business Management - LM507 1. Objectives The aim of the Programme is to provide participants with knowledge in the field of International Business that will be both academically rigorous